How much deposit do I need to put down to buy my new home?

Your home may be repossessed if you do not keep up repayments on your mortgage.

All information was accurate at the time of publication.

3rd May 2024

Ever wonder how much you need to save up for a down payment on your dream home? This is a super common question, and for good reason! Buying a house is a big deal.

In this blog, we'll break down your options to make saving a bit less daunting.

What's the minimum you need to put down? Things have changed a bit in recent years. A while back, lenders might have wanted a 10% or even 15% deposit. But the good news is, these days most lenders are happy with a 5% deposit. There are even a few exceptions, like the Track Record Mortgage from Skipton Building Society.

The Track Record Mortgage from Skipton might be a great fit for you! It lets you borrow up to 100% of the property value, which can be a huge help when saving for a depost.

The Track Record Mortgage is for borrowers who can prove they have kept up rental payments for 12 months, within the last 18 months. You can borrow up to 100% of a properties value!

Here's the key thing to know: To qualify, you'll need to show proof that you've kept up with your rent for the past year. Skipton wants to see that you're a responsible renter.

They know saving for a house can be tough, so this program is aimed at first-time buyers like you! Skipton will consider you to be a First Time Buyer if you haven’t owned property in the last 3 years.

This is for people with a deposit of less than 5% of the property value. If you have 5% or more, then you would have to look at their standard products. You can put down a deposit of less than 5% and this can even come from a generous gift from a family member.

You must have a clean credit file. If you have any issues with your credit, you won’t be able to apply for this mortgage. We always suggest checking your credit report with Check My File who have a very easy to understand report that combines Equifax, Experian and Transunion in one.

You need to have been paying household bills for 12 of the last 18 months. If you’re living with family and paying rent, but the council tax, water, electricity is being paid elsewhere, then this isn’t for you.

The maximum loan size is £600,000.

This isn’t available on new build flats.

The way the mortgage works is that they look at your rent and can lend you a certain amount based on the rent you have paid.

For example, if your rent is £1,000 per month and you have the mortgage over 35 years, they can lend you £185,084. If your rent is £1,500 per month and you have the mortgage over 35 years, it increases to £277,625.

You still have to pass their normal affordability checks as well.

I recently had a client who was an artist where their income was dependent on them selling their art.

They had a high rent of £2,000 per month, which meant they could borrow £370,167, but because their income was sporadic, the affordability calculator meant they couldn't afford £370,167. Don’t worry, we’ll go through these calculations with you and let you know what’s realistic.

Similar, but different is Accord Mortgages “£5k Deposit Mortgage for First Time Buyers”. Accord are part of Yorkshire Building Society and have a product that, you guessed it, helps first time buyers buy their first home with just £5,000. Like Skipton above, there are a few hoops to jump through, but we’ll have a look at this now.

The minimum loan size is £95,001, which means that the minimum property value is £100,001.

The maximum loan size is £495,000, which means that the maximum property value is £500,000.

It’s only available on houses and these houses can’t be new build properties. No flats I’m afraid.

If you’re buying as a couple, only one of you needs to be a First Time Buyer, although there can’t be any background properties on the application.

You have to go through the usual affordability checks, but the maximum loan to income ratio is 4.49x. This means if your joint income is £50,000, the maximum you can borrow is £224,500.

The £5,000 deposit can be from savings or a gift from family.

As with Skipton, this product is for first time buyers with clean credit files. Any blips, and this won’t be available to you.

Away from these two products, you will need at least a 5% deposit. Lots of the high street lenders have 95% products and these are just traditional mortgages.

There are other ways you can make your deposit work harder for you, such as shared ownership and shared equity. We’ll cover these off in a separate blog rather than trying to fit all the information in here. Do look out for future blogs if this is something that is of interest to you.